A G E N D A. 1. To confirm the minutes of the tenth Annual General Meeting held on 11 June 2011.

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1 ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE 2011

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3 NOTICE OF ANNUAL GENEAL MEETING NOTICE IS HEEBY GIVEN that the ELEVENTH ANNUAL GENEAL MEETING of members of THE BUILDING & CONSTUCTION INDUSTY MEDICAL AID FUND will be held in the ECEPTION OOM at METO CENTE, 158 LOVEDAY STEET, BAAMFONTEIN, (OPPOSITE CIVIC THEATE - LOVEDAY STEET cnr DE KOTE STEET) ON SATUDAY, 09 JUNE 2012 AT 10H00, for the purpose of transacting the following business: Please note: Admission to the meeting will be on production of a valid membership card. egistration will be from 09H00 to 10H00 and the meeting will commence at 10H00. A G E N D A 1. To confirm the minutes of the tenth Annual General Meeting held on 11 June To receive and consider the eport of the Board of Trustees for the year ended 31 December 2011, together with the Statement of Financial Position as at 31 December 2011 and the Statement of Comprehensive Income for the year ended 31 December 2011, together with the report of the Auditors. 3. To confirm Board of Trustees. 4. To confirm Trustee emuneration. 5. To appoint the auditor for the ensuing year. 6. To transact any other business that may be transacted at an annual general meeting. (Notices of motions to be placed before the annual general meeting must please be in writing and must reach the principal officer not later than seven days prior to the date of the meeting). BY ODE OF THE BOAD OF TUSTEES 7 May 2012 Administered by egistration number: 1947/001443/07 BUCHANAN HOUSE 89 LOVEDAY STEET P.O. BOX 3201 JOHANNESBUG 2000 TEL. NO.: / FAX NO.: /

4 THE BUILDING & CONSTUCTION INDUSTY MEDICAL AID FUND MINUTES OF THE TENTH ANNUAL GENEAL MEETING OF THE BUILDING & CONSTUCTION INDUSTY MEDICAL AID FUND, HELD IN THE ECEPTION OOM, GOUND FLOO, AT METO CENTE, 158 LOVEDAY STEET BAAMFONTEIN, ON SATUDAY, 11 JUNE 2011, AT 10H PESENT: Mr C De Kock - Chairperson Ms E Gilbert (member) - Trustee Mr E Koji (member) - Trustee Mr J Mpe (member) - Trustee Members - 23 present Action IN ATTENDANCE: Mr B le oux - Principal Officer Mr D Maunye and Mesdames S Lowings, H Baker, Y Disney, L Lekhathe - representing the Administrator 2. APOLOGIES: Mr W Soutter Mr Mamesha Mr Ndaiza 3. OPENING AND NOTICE OF MEETING: The notice dated 9 May 2011 calling the meeting was duly publicised as per the ules of the Scheme. Mr De Kock apologised for the late start. By 10h15 the necessary quorum was present and the chairperson welcomed all and the meeting was declared duly constituted. 4. CONFIMATION OF THE MINUTES OF THE NINTH ANNUAL GENEAL MEETING HELD ON 31 JULY 2010: The minutes of the ninth annual general meeting held on 31 July 2010, having been circulated, were adopted after being unanimously accepted. Mr P Maila proposed and Mr Motsamai seconded. 5. TO ECEIVE AND CONSIDE THE ANNUAL FINANCIAL STATEMENTS, AUDITOS EPOT AND ANNUAL EPOT FO THE YEA ENDED 31 DECEMBE 2010: It was reported that the Board of Trustees had reviewed and approved the Annual Financial Statements. Mr P Maila queried the outstanding claims provision on page 11 of the Annual Financial Statements. Mr De Kock explained that the financial statements are set up on the last day of the financial year. Even though claims may have been processed the payment might not yet have been made, so allowance is made in the financial statements to cover this. These are not additional claims. Mr Maila also requested an explanation of the remuneration of the Board of Trustees. Mr De Kock explained that all meeting attendance is paid at the same amount whether it be Audit, Board of Trustees (BoT) or Marketing meetings. It was explained that to have a quorum for the Board of Trustee Meetings 50% of the Trustees must be present. Full numbers constitute 4 trustees representing members and 4 trustees representing employers. A minimum of 2 member representatives and 2 employers representatives plus 1 must be present. Therefore 5 out of 8 must attend. No quorum, no meeting. An explanation of the Credit isk was asked for. Mr De Kock explained that this is not credit given to members for benefits. This refers to the risk of interest received on monies invested. If funds are managed well there is less risk, etc. As there were no further questions regarding the Financial Statements they were put to the floor for approval. The motion was proposed by Mr Maila and seconded by Mr Monjane and unanimously agreed to. BCIMA/AGM

5 2 6. CONFIMATION OF THE BOAD OF TUSTEES FO 2011: The current Board of Trustees comprised the following members: Action Employer Trustee Employee Trustee Mr C De Kock Mr Daizana Mr C Froneman Ms E Gilbert Mr K Heisi Mr E Koji Mr W Soutter Mr J Mpe Confirmation of the appointment of the Board of Trustees was proposed, seconded and unanimously accepted. 7. TUSTEE EMUNEATION: The Chairperson confirmed that the Trustees remuneration for the year under review was 500 per meeting attended. It was agreed to increase the remuneration to 750 per meeting attended for the 2011 year, for time spent at the meeting as well as increased travelling costs. A member from Cavaleros Construction suggested that they would be happy for the trustee remuneration to go up to per meeting attended. The Board members were happy with the amount of 750 and the increase to 750 was duly approved by the members. 8. APPOINTMENT OF AUDITOS FO THE ENSUING YEA: The Chairperson proposed that the current Auditor ansome ussouw be re-appointed for the ensuing year. The proposal was agreed to. 9. GENEAL: The Chairperson stated that no notice of any motions had been received but invited those present to raise any general matters pertaining to the Fund only. Any queries regarding claims or membership were to be referred to the staff of the Fund present. 9.1 A member raised a question of registering a second wife and children. Can only the children from the second wife be registered? Darius Maunye explained that only one wife can be registered. Should it be requested to register a second wife, either a Divorce Decree or Death Certificate must be submitted. Mr De Kock said that the Fund needs to address the issue of registering children from different wives as the children are dependants because of the father and not the mother. efer to ule 4:21:3 Subsequent to the meeting, following discussion at various meetings of the Board of Trustees, the following criteria applies for registering of principal member s dependants: 1. Children bearing the father s surname. 2. Only one wife and children bearing her surname. 3. Adoption Documentation. 4. Court Order. 5. Documentation from Welfare for foster care. 6. Full birth certificate. 7. Clinic/hospital card reflecting both parents full names. 9.2 Mr Maila wanted to know who decides to increase the members contributions - The Board of Trustees or the Fund? Mr De Kock explained that the Administrator and the Board of Trustees check the income and costs as well as the claims record. The decision is then made once the costs are balanced against the income. For the last couple of years an independent actuary had reported on the figures before the final decision is made by the Board of Trustees. BCIMA/AGM

6 3 9.3 A member asked whether it would be possible for the fund to meet with the members before increasing contributions? Mr De Kock explained it would be impossible to meet with the members of the fund regarding contribution increases. Increases in contributions can also not be measured on what salary increases are going to be. The claims and payment history for the previous year must be evaluated before deciding on contribution increases. Action Darius Maunye appealed to members to help grow the fund s membership so we might be able to have reduced increases in contributions - more members are needed! A member then commented that the Board of Trustees keep changing their statements in meetings. At the last meeting it was said that changes would not be made without consulting members. Mr De Kock replied that it was impossible to consult with all members of the Fund regarding all issues. Therefore they consult with experts in the field for guidance. 9.4 Mr Maila said that medical aid information must reach members well before the meeting date. He felt that members were resigning because of not receiving information on time. Darius Maunye replied that the Employer Trustees must report back to the company as well as the workers after meetings. This way employees will be kept informed. Mr Koji asked members to encourage co-workers to attend meetings. They can then discuss any problems they may have. 9.5 A member from Gothic Construction said that previously only skilled people were encouraged to join the medical aid. Who will show the younger workers the benefits of joining the Fund? Mr De Kock replied that the Administrator was appointed to administer the day to day running of the fund, i.e. claims, etc. A marketing committee has now been set up to visit companies to recruit members and explain the benefits of medical aid to employees. The Fund originated from the Bargaining Council who made it a condition of employment to belong to the fund. Employees concerns are going to be addressed in a focused way to grow the fund to enable contribution costs to be kept down. 9.6 A member mentioned that BCIMA must watch out for people from other medical aids confusing our members by talking badly of the Fund. He said that BCIMA is a good fund and must be protected and kept going. He suggested that in the contract of employment membership of the medical aid and provident fund should be made compulsory. Mr De Kock explained that other funds are commercial funds and that shareholders must be paid from the available funds. BCIMA is owned by the members therefore membership must grow to keep the fund strong. With BCIMA a single contribution is paid which covers the whole family. The members will have to approach their Unions for assistance with getting employers to make medical aid a condition of employment. The Fund cannot do this. Mr le oux commented that Bonitas had had their Trustees removed and were placed under curatorship by the Council for Medical Schemes. Members must inform the fund of any bad mouthing of the fund so that he can contact the medical aid concerned to sort out the problem. 9.7 Mr Chakane commented that more attendance was needed at meetings. 10. CLOSUE: There being no further business, the Chairperson thanked those present for attending. He declared the meeting closed at 11h40. BCIMA/AGM DATE CHAIPESON

7 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE 2011 CONTENTS Statement of responsibility by the Board of Trustees Statement of corporate governance by the Board of Trustees eport of the independent auditors to the members of The Building and Construction Industry Medical Aid Fund eport of the Board of Trustees Statement of financial position Statement of comprehensive income Statement of changes in funds and reserves Statement of cash flows Notes to the annual financial statements PAGE

8 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE 2011 STATEMENT OF ESPONSIBILITY BY THE BOAD OF TUSTEES The trustees are responsible for the preparation, integrity, and fair presentation of the annual financial statements of The Building and Construction Industry Medical Aid Fund. The financial statements presented on pages 5 to 35 have been prepared in accordance with International Financial eporting Standards (IFS) and the SAICA Medical Schemes Accounting Guide for the year ended 31 December 2011 and include amounts based on judgements and estimates made by management. The trustees consider that in preparing the annual financial statements they have used the most appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The trustees are satisfied that the information contained in the annual financial statements fairly presents the results of operations for the year and the financial position of the scheme at year-end. The trustees also prepared the other information included in the annual report and are responsible for both its accuracy and its consistency with the financial statements. The trustees are responsible for ensuring that accounting records are kept. The accounting records disclose with reasonable accuracy the financial position of the scheme to enable the trustees to ensure that the annual financial statements comply with the relevant legislation. The Building and Construction Industry Medical Aid Fund operated in a well-established control environment, which is well documented and regularly reviewed. This incorporates risk management and internal control procedures, which are designed to provide reasonable, but not absolute, assurance that assets are safeguarded and the risks facing the business are being controlled. The going concern basis has been adopted in preparing the financial statements. The trustees have no reason to believe that the scheme will not be a going concern in the foreseeable future, based on forecasts and available cash resources. These financial statements support the viability of the scheme. The scheme s external auditors, ansome ussouw Chartered Accountants (SA), are responsible for auditing the annual financial statements, and their report is presented on page 4. The financial statements were approved by the Board of Trustees on 19 April 2012 and are signed on its behalf by: 2

9 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE 2011 STATEMENT OF COPOATE GOVENANCE BY THE BOAD OF TUSTEES The Building and Construction Industry Medical Aid Fund is committed to the principles and practice of fairness, openness, integrity and accountability in all dealings with its stakeholders. The trustees are proposed and elected by the members of the scheme and the employers. Board of Trustees The trustees meet regularly and monitor the performance of the administrators. They address a range of key issues and ensure that discussion of items of policy, strategy and performance is critical, informed and constructive. All trustees have access to the advice and services of the principal officer and, where appropriate, may seek independent professional advice at the expense of the scheme, to support them in their duties. Internal Control The administrators of the scheme maintain internal controls and systems designed to provide reasonable assurance as to the integrity and reliability of the financial statements and to safeguard, verify and maintain accountability for its assets adequately. Such controls are based on established policies and procedures and are implemented by trained personnel with the appropriate segregation of duties. No event or item has come to the attention of the Board of Trustees that indicates any material breakdown in the functioning of key internal controls and systems during the year under review. Transparency and Ethics The scheme conducts is affairs according to high ethical values and in a manner that contributes to the welfare of the key stakeholders. We are committed to open communication with our stakeholders about the scheme s financial and business targets and to treat them fairly in all our business dealings. isk assessment and Evaluation The Trustees have developed a risk register which lists the key risks that are facing the scheme. The risks are continually evaluated and assessed to ensure that the necessary plans are implemented to control and manage these risks. The performance of the Board of Trustees and Board sub-committees are evaluated against agreed terms of reference and performance targets. 19 April

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11 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND EPOT OF THE BOAD OF TUSTEES FO THE YEA ENDED 31 DECEMBE 2011 The Board of Trustees hereby presents its report for the year ended 31 December DESCIPTION OF THE MEDICAL SCHEME 1.1 Terms of registration The Building and Construction Industry Medical Aid Fund is a not-for-profit closed medical scheme registered in terms of the Medical Schemes Act 131 of 1998 (the Act), as amended. The scheme is exempt from providing prescribed minimum benefits in terms of the provisions of Section 29(1)(o) of the Act, until 31 December Benefit option within The Building and Construction Industry Medical Aid Fund The scheme offers one benefit option which is restricted to employees, employed by employers in the construction industry. 2 MANAGEMENT 2.1 Board of Trustees in office during the year under review Name Details J Tubb Chairperson (Employer Trustee) Appointed 24 November 2011 C Froneman Employer Trustee W Soutter Employer Trustee Appointed 02 June 2011 E Koji Member Trustee E Gilbert (Alternate: L Lekgoathi) Member Trustee J Mpe Member Trustee Appointed 10 February 2011 Daizana (Alternate: J abothata) Member Trustee C de Kock Employer Trustee esigned 03 October 2011 K Heisi Employer Trustee esigned 11 October 2011 M Schutte Employer Trustee esigned 02 June Principal Officer Mr B Le oux Haloux Healthcare Solutions (Pty) Ltd Universal House PO Box Tambach oad ivonia Sunninghill Park 2149 Sandton 2.3 egistered office address and postal address Universal House PO Box Tambach oad Johannesburg Sunninghill Park 2000 Sandton 2.4 Medical Scheme Administrator during the year Universal Healthcare Administrators (Pty) Ltd Universal House PO Box Tambach oad ivonia Sunninghill Park 2128 Sandton Accreditation number: ADMIN:5 5

12 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND EPOT OF THE BOAD OF TUSTEES FO THE YEA ENDED 31 DECEMBE MANAGEMENT (continued) 2.5 Auditors ansome ussouw Chartered Accountants (SA) 1st Floor PO Box Sherborne oad Cresta Parktown Actuary oseanne da Silva PO Box oseanne da Silva and Associates cc Bryanston INVESTMENT STATEGY OF THE MEDICAL SCHEME The scheme s investment objectives are to maximise the return on its investments on a long term basis at minimal risk. The investment strategy takes into consideration both constraints imposed by legislation and those imposed by the Board of Trustees. Details of investments are set out in the annual financial statements. Investment decisions are made by the Board of Trustees to ensure that: - the scheme remains liquid; - investments are placed at minimum risk and the best possible rate of return; - investments are made in compliance with the regulations of the Act; - a risk assessment is performed. The scheme invested in equities, term deposits and money market instruments during This policy is reviewed regularly, taking into consideration compliance with the Act, the risk and returns of the various investment instruments and the surplus of funds available. 4 MANAGEMENT OF INSUANCE ISK The primary insurance activity carried out by the scheme assumes the risk of loss from members and their dependants that are directly subject to the risk. This risk relates to the health of the scheme members. As such the scheme is exposed to the uncertainty surrounding the timing and severity of claims under the contract. The scheme manages its insurance risk through benefit limits and sub-limits, approval procedures for transactions that involve pricing guidelines, pre-authorisation and case management, service provider profiling and the monitoring of emerging issues. The scheme uses several methods to assess and monitor insurance risk exposures both for individual types of risks insured and overall risks. The principal risk is that the frequency and severity of claims are greater than expected. Insurance events are, by their nature, random, and the actual number and size of events during any one year may vary from those estimated with established statistical techniques. There are no changes to assumptions used to measure insurance assets and liabilities that have a material effect on the financial statements and there are no terms and conditions of insurance contracts that have a material effect on the amount, timing, and uncertainty of the scheme s cash flows. 6

13 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND EPOT OF THE BOAD OF TUSTEES FO THE YEA ENDED 31 DECEMBE EVIEW OF THE ACCOUNTING PEIOD S ACTIVITIES 5.1 Operational statistics Average number of members during the accounting period 4,876 4,916 Number of members at 31 December 4,811 4,958 Average number of dependants during the accounting period 7,462 7,363 Number of dependants at 31 December 7,646 7,565 Average number of beneficiaries during the accounting period 12,338 12,279 Number of beneficiaries at 31 December 12,457 12,523 Dependant ratio at 31 December Net contributions per average beneficiary per month () elevant healthcare expenditure per average beneficiary per month () Non-healthcare expenditure per average beneficiary per month () elevant healthcare expenditure as a percentage of gross contributions (%) Non-healthcare expenditure as a percentage of gross contributions (%) Average age of beneficiaries Pensioner ratio at 31 December Average accumulated funds per member at year end () 11,448 8,980 Breakdown of total amount paid to administrator: - Administration fees () 7,614,265 6,986,008 - Investment data collation fees () 49,075 21,507 eturn on investments as a percentage of investments (%) esults of operations The results of the scheme are set out in the annual financial statements, and the trustees believe that no further clarification is required. 5.3 Solvency ratio Total members funds per balance sheet 55,594,926 45,023,223 Less: Available-for-sale reserve (519,173) (499,668) Accumulated funds per egulation 29 55,075,753 44,523,555 Gross contributions 67,407,853 61,868,974 Solvency ratio: (Accumulated funds/gross annual contribution income x 100) 81.7% 72.0% 7

14 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND EPOT OF THE BOAD OF TUSTEES FO THE YEA ENDED 31 DECEMBE eserve accounts Movements in the reserves are set out in the Statement of Changes in Funds and eserves. There have been no unusual movements that the trustees believe should be brought to the attention of the members of the scheme. 5.5 Outstanding claims The basis of calculation of the outstanding claims provision is discussed in Note 5 to the annual financial statements and this is consistent with the prior year. Movements in the outstanding claims provision are set out in Note 5 to the annual financial statements. There have been no unusual movements that the trustees believe should be brought to the attention of the members of the scheme. 6 ACTUAIAL SEVICES The Scheme s actuary was consulted for the 2012 budget review and in determining the contribution and benefit levels for EVENTS AFTE STATEMENT OF FINANCIAL POSITION DATE There have been no events that have occurred subsequent to the end of the accounting period that affect the annual financial report and that the trustees consider should be brought to the attention of the members of the scheme. 8 INVESTMENTS IN AND LOANS TO PATICIPATING EMPLOYES OF MEMBES OF THE MEDICAL SCHEME AND TO OTHE ELATED PATIES The scheme holds no investments in participating employers of scheme members. 9 ELATED PATY TANSACTIONS elated party transactions are set out in Note 14 to the financial statements. 10 AUDIT COMMITTEE An audit committee was established in accordance with the provisions of the Act. The committee is mandated by the Board of Trustees by means of written terms of reference as to its membership, authority and duties. The committee consists of five members, of which two are members of the Board of Trustees. The majority of the members, including the chairperson, are not officers of the medical scheme or its third party administrator. The committee met on two occasions during the course of the year. In accordance with the provisions of the Act, the primary responsibility of the committee is to assist the board of trustees in carrying out its duties relating to the scheme s accounting policies, internal control systems and financial reporting practices. The external auditors formally report to the committee on critical findings arising from audit activities. The committee, during the year under review and up to the date of approval of the financial statements, comprised: Name Details M eid Chairperson T Davies Independent C Fontaine (Alternate: Harris) Independent E Koji Trustee J Tubb Trustee Appointed 24 November 2011 C de Kock Trustee esigned 03 October

15 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND EPOT OF THE BOAD OF TUSTEES FO THE YEA ENDED 31 DECEMBE BOAD OF TUSTEES AND AUDIT COMMITTEE MEETING ATTENDANCE The following schedule sets out the Board of Trustees and Audit Committee meeting attendances. Trustee s remuneration is disclosed in Note 10 to the annual financial statements. Trustee/Committee Member Board Meetings Audit Committee Meetings Other Sub Committee Meetings A B A B A B * C Froneman * K Heisi * M Schutte * Daizana (Alternate: J abothata) * J abothata * E Gilbert (Alternate: L Lekgoathi) * J Mpe * W Soutter * E Koji * J Tubb * C de Kock M eid T Davies C Fontaine Harris A - Total possible number of meetings could have attended. B - Actual number of meetings attended. * Trustee/Alternate Trustee 9

16 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND EPOT OF THE BOAD OF TUSTEES FO THE YEA ENDED 31 DECEMBE NON-COMPLIANCE WITH THE ACT In accordance with the Council for Medical Schemes circular 11/2006 the scheme is required to report all non-compliance with the Act noted during the course of the audit irrespective of whether the auditor considers the non-compliance as material or immaterial Payment of contributions Section 26(7) of the Act requires contributions to be paid to a scheme not later than three days after payment thereof becoming due. Whilst every effort is made to enforce this requirement the onus is on the member/employer group to ensure compliance. During the financial year certain contributions were identified that were not paid to the scheme within three days of becoming due. The non-compliance could increase the liquidity risk to the scheme. Credit control procedures are followed to collect outstanding amounts. Members are suspended when contributions are not paid. As a result payment of claims for suspended members are withheld until outstanding amounts have been settled Board of Trustees Section 57(1) of the Act requires a medical scheme to have a Board of Trustees to manage the business contemplated by the medical scheme in accordance with the applicable laws and the rules of such medical scheme. The rules of the scheme provide for a minimum of eight trustees. Due to the resignation of K Heisi, on 11 October 2011, the Board consisted of only seven trustees. The Board of Trustees is in the process of selecting a suitable candidate to fill the vacancy. 10

17 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND STATEMENT OF FINANCIAL POSITION FO THE YEA ENDED 31 DECEMBE 2011 ASSETS Notes Non-current assets Available-for-sale investments 2 583, ,818 Current assets 60,868,163 50,234,991 Trade and other receivables 3 1,406,182 1,887,184 Cash and cash equivalents 4 59,461,981 48,347,807 Total assets 61,451,486 50,798,809 FUNDS AND LIABILITIES Members funds 55,594,926 45,023,223 Accumulated funds 55,075,753 44,523,555 Available-for-sale reserve 519, ,668 Current liabilities 5,856,560 5,775,586 Outstanding claims provision 5 4,600,000 4,250,000 Trade and other payables 6 1,256,560 1,525,586 Total funds and liabilities 61,451,486 50,798,809 11

18 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND STATEMENT OF COMPEHENSIVE INCOME FO THE YEA ENDED 31 DECEMBE 2011 Notes Net contribution income 7 67,407,853 61,868,974 elevant healthcare expenditure (50,034,943) (49,311,171) Net claims incurred (50,034,943) (49,311,171) Claims incurred 8 (50,039,307) (49,551,121) Third party claim recoveries 4, ,950 Gross healthcare result 17,372,910 12,557,803 Managed care: management services 9 (898,423) (776,884) Administration expenditure 10 (8,974,103) (8,124,302) Broker commission (4,168) - Net healthcare result 7,496,216 3,656,617 Other income 3,055,982 3,009,120 Investment income 11 3,044,377 3,008,475 Sundry income 12 11, Other expenditure Asset management fees - - Net surplus for the year 10,552,198 6,665,737 Other comprehensive income 19, ,884 Unrealised gains on revaluation of available-for-sale investments (Note 2) 19, ,884 Total comprehensive income for the year 10,571,703 6,769,621 12

19 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND STATEMENT OF CHANGES IN FUNDS AND ESEVES FO THE YEA ENDED 31 DECEMBE 2011 Accumulated funds Available-for-sale reserve Total members funds Balance at 1 January ,857, ,784 38,253,602 Total comprehensive deficit for the year 6,665, ,884 6,769,621 Surplus for the year 6,665,737-6,665,737 Other comprehensive loss - 103, ,884 Balance at 1 January ,523, ,668 45,023,223 Total comprehensive income for the year 10,552,198 19,505 10,571,703 Net surplus for the year 10,552, ,198 Other comprehensive income - 19,505 19,505 Balance at 31 December ,075, ,173 55,594,926 13

20 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND STATEMENT OF CASH FLOWS FO THE YEA ENDED 31 DECEMBE 2011 Cash flows from operating activities Notes Cash flows from operations before working capital changes 13 7,507,821 3,657,262 Working capital changes: - Decrease/(Increase) in trade and other receivables 481,002 (1,024,091) - (Decrease)/Increase in trade and other payables (269,026) 556,986 - Increase/(Decrease) in outstanding claims provision 350,000 (360,000) Cash generated from operating activities 8,069,797 2,830,157 Cash flows from investing activities Interest received 3,021,160 2,987,511 Dividends received 23,217 20,964 Cash generated from investing activities 3,044,377 3,008,475 Net increase in cash and cash equivalents 11,114,174 5,838,632 Cash and cash equivalents at beginning of year 48,347,807 42,509,175 Cash and cash equivalents at end of year 4 59,461,981 48,347,807 14

21 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE PINCIPAL ACCOUNTING POLICIES The following are the principal accounting policies used by the scheme, which are consistent with those of the previous year. 1.1 Basis of preparation The financial statements are prepared in accordance with International Financial eporting Standards (IFS) on the historical cost convention, except for financial instruments, which are carried at fair value. Critical accounting judgements and areas of key sources of estimation uncertainty The scheme makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. Certain critical accounting judgements in applying the scheme s accounting policies and key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the next financial year, are disclosed below. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The ultimate liability arising from claims made under insurance contracts There are some sources of uncertainty that need to be considered in the estimate of the liability that the scheme will ultimately pay for such claims. Initial estimates are made by the administrator s staff relating to the best calculations on reported claims and derived as the claims process develops. All estimates are revised and adjusted at year-end by management. New standards, amendments and interpretations effective in 2011 and relevant to the scheme The following new standards, amendments and interpretations are effective for the current financial year and relevant to the scheme: Effective date - Title Financial year commencing on or after Improvements to IFS 7 Financial Instruments: Disclosures 1 Jan 2011 Improvements to IAS 1 Presentation of Financial Statements 1 Jan 2011 IAS 24 elated Party Disclosures 1 Jan

22 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE PINCIPAL ACCOUNTING POLICIES (continued) 1.1 Basis of preparation (continued) New standards, amendments and interpretations not yet effective and not expected to be relevant to the scheme The following new standards, amendments and interpretations are effective for the current financial year but not relevant to the scheme s operations: Effective date - Title Financial year commencing on or after IFIC 19 Extinguishing Financial Liabilities with Equity Instruments 1 Jan 2011 Amendments to IFS 3 Business Combinations 1 Jan 2011 Amendments to IAS 7 Consolidated and Separate Financial eporting 1 Jan 2011 Improvements to IAS 34 Interim Financial eporting 1 Jan 2011 Improvements to IFIC 13 Customer Loyalty Programmes 1 Jan 2011 Amendments to IFIC 14 and IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding equirements and their Interaction 1 Jan 2011 New standards, amendments and interpretations not yet effective but expected to be relevant to the scheme The following new standards, amendments and interpretations are mandatory for accounting periods as indicated and are expected to be applicable to the scheme: Effective date - Title Financial year commencing on or after Amendments to IFS 7 Disclosures - Transfers of Financial Assets 1 Jul 2011 Amendments to IAS 1 Presentation of Items of Other Comprehensive Income 1 Jul 2012 IFS 12 Disclosure of Interests in Other Entities 1 Jan 2013 IFS 13 Fair Value Measurement 1 Jan 2013 IFS 9 Financial Instruments 1 Jan

23 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE PINCIPAL ACCOUNTING POLICIES (continued) 1.1 Basis of preparation (continued) New standards, amendments and interpretations not yet effective and not expected to be relevant to the scheme The following new standards, amendments and interpretations are mandatory for accounting periods as indicated however it is not expected to be applicable to the scheme: Effective date - Title Financial year commencing on or after IAS 27 Separate Financial Statements (2011) 1 Jan 2013 IFS 10 Consolidated Financial Statements 1 Jan 2013 IAS 19 Employee Benefits 1 Jul 2013 IFS 11 Joint Arrangements 1 Jul 2013 IAS 28 Investment in Associates 1 Jul Financial instruments ecognition Financial assets and liabilities are recognised in the scheme s statement of financial position when it becomes a party to the contractual provisions of the instrument. Such recognition presumes that the risks and rewards of ownership and the control over these financial assets and liabilities are vested in the scheme. Measurement Financial instruments are initially measured at fair value plus, in the case of financial assets and liabilities not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or liability. Subsequent to initial recognition, these instruments are measured as set out below. Investments All purchases and sales of investments are recognised on the trade date, which is the date that the scheme commits to purchase or sell the asset. Cost of purchases includes transaction costs. Available-for-sale investments are subsequently carried at fair value. Unrealised gains and losses arising from changes in the fair value of the available-for-sale investments are included in the available-for-sale reserve and are taken to the statement of comprehensive income. Once the available-for-sale investment is sold, the realised fair value gain or loss on the available-for-sale investments is included in the statement of comprehensive income as investment income. Trade and other receivables Trade and other receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest method. An appropriate allowance for estimated irrecoverable amounts is recognised in the statement of comprehensive income when there is objective evidence that the asset is impaired. This allowance recognised is measured as the difference between the asset s carrying amount and the present value of the estimated future cash flows. Permanent impairments are written off to the statement of comprehensive income when identified. 17

24 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE PINCIPAL ACCOUNTING POLICIES (continued) 1.2 Financial instruments (continued) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits held on call with banks, other short-term liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Financial liabilities Financial liabilities are measured on initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest method. Offset Where a legally enforceable right of offset exists for recognised financial assets and financial liabilities, and there is an intention to settle the liability and realise the asset simultaneously or to settle on a net basis, all related financial effects are offset. Derecognition Financial assets are derecognised when the rights to receive cash flows from them have expired or where they have been transferred, and the scheme has also transferred substantially all risks and rewards of ownership. A financial liability is derecognised when the contractual obligation (deposit component) is discharged as expired. 1.3 Provisions Provisions are recognised when the scheme has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the effect of discounting to present value is material, provisions are adjusted to reflect the time value of money. 1.4 Outstanding claims Claims outstanding comprise provisions for the scheme s estimate of the ultimate cost of settling all claims incurred but not yet reported at the statement of financial position date. Claims outstanding are determined as accurately as possible on the basis of a number of factors, which include previous experience in claims patterns, claims settlement patterns, changes in the nature and number of members according to gender and age, trends in claims frequency, changes in the claims processing cycle, and variations in the nature and average cost incurred per claim. Estimated co-payments are deducted in calculating the outstanding claims provision. The scheme does not discount its provision for outstanding claims, since the effect of the time value of money is not considered material. 1.5 Insurance contracts Contracts under which the scheme accepts significant insurance risk from another party (the member) by agreeing to compen sate the member or other beneficiary if a specified uncertain future event (the insured event) adversely affects the member or other beneficiary are classified as insurance contracts. The contracts issued compensate the scheme s members for healthcare expenses incurred. 18

25 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE PINCIPAL ACCOUNTING POLICIES (continued) 1.6 Contribution income Contributions on member insurance contracts are accounted for monthly when their collection in terms of the insurance contract is reasonably certain. The earned portion of contributions received is recognised as revenue. Contributions are earned from the date of attachment of risk, over the indemnity period on a straight-line basis. 1.7 elevant healthcare expenditure elevant healthcare expenditure consists of net claims incurred. 1.8 Claims incurred and net claims incurred Claims incurred comprise the total estimated cost of all claims arising from healthcare events that have occurred in the year and for which the scheme is responsible, whether or not reported by the end of the year. Net claims incurred represent claims incurred, net of recoveries from members for co-payments, after taking into account recoveries from third parties. 1.9 Liabilities and related assets under liability adequacy test The liability for insurance contracts is tested for adequacy by discounting current estimates of all future contractual cash flows, including related cash flows such as claims handling costs, and comparing this amount to the carrying value of the liability net of any related assets (i.e. the value of business acquired). Where a shortfall is identified, an additional provision is made and the scheme recognises the deficiency in income for the year eimbursements from the oad Accident Fund (AF) The scheme grants assistance to its members in defraying expenditure incurred in connection with the rendering of any health service. Such expenditure may be in connection with a claim that is also made to the AF, administered in terms of the oad Accident Fund Act No. 56 of If the member is reimbursed by the AF, they are obliged contractually to cede that payment to the scheme to the extent that they have already been compensated. A reimbursement from the AF is a possible asset that arises from claims submitted to the AF and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the scheme. The contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognised in the financial statements of the period in which the change occurs. If an inflow of economic benefits has become probable, the scheme discloses the contingent asset. ecoveries from the AF are reflected as third party claim recoveries in the statement of comprehensive income Investment income Investment income comprises interest, dividends and realised gains on available-for-sale investments. Interest income is recognised on a yield to maturity basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the scheme. Dividend income from investments is recognised when the right to receive payment is established. ealised gains arising on the sale of available-for-sale investments are recognised in the statement of comprehensive income. 19

26 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE PINCIPAL ACCOUNTING POLICIES (continued) 1.12 Impairment losses The carrying amounts of the scheme s assets are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income. Calculation of recoverable amount The scheme s receivables are not discounted due to the short term nature of their recoverability. eversals of impairment An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised. 20

27 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE AVAILABLE-FO-SALE INVESTMENTS Cost at beginning of year 63,605 63,605 Unrealised gains on revaluation 500, ,329 Fair value at beginning of the year 563, ,934 Unrealised gains on revaluation 19, ,884 Fair value at end of the year 583, ,818 The investment included above consists of: Listed equities on the JSE 583, ,818 Available-for-sale investments are classified as non-current assets, unless they are expected to be realised within twelve months of the statement of financial position date or unless they will need to be sold to raise operating capital. A register of investments is available for inspection at the registered office of the scheme. 3 TADE AND OTHE ECEIVABLES Insurance receivables Contributions outstanding 1,201,802 1,402,604 ecoveries from members for co-payments 1,734 3,541 1,203,536 1,406,145 Non-insurance receivables Interest receivable on investments 193, ,980 Prepaid expenses 8,834 14,247 Other receivables - 26, , ,039 1,406,182 1,887,184 The carrying amounts of trade and other receivables approximate their fair values due to the short-term maturities of these assets. 21

28 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE CASH AND CASH EQUIVALENTS Call accounts 689, ,781 Current accounts 1,668,219 1,600,144 Money market instruments 15,401,377 10,715,193 Term deposits 41,702,669 35,422,689 59,461,981 48,347,807 The weighted average effective interest rates are: Money market instruments 5.61% 6.36% Term deposits 5.99% 7.06% The average maturities are: Money market instruments 43 days 42 days Term deposits 123 days 181 days The carrying amounts of cash and cash equivalents approximate their fair values due to the short-term maturities of these assets. 5 OUTSTANDING CLAIMS POVISION Balance at beginning of the year 4,250,000 4,610,000 Payments in respect of prior year (4,190,058) (4,429,282) Over provision in prior year (Note 8) 59, ,718 Adjustment for current year 4,540,058 4,069,282 Balance at end of the year 4,600,000 4,250,000 Analysis of outstanding claims provision Estimated gross claims 4,722,590 4,333,348 Less: estimated recoveries from member co-payments (122,590) (83,348) Balance at end of the year 4,600,000 4,250,000 22

29 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE OUTSTANDING CLAIMS POVISION (continued) Process used to determine the assumptions In order to qualify for benefits any claim must, unless otherwise arranged, be submitted to the scheme not later than the last day of the fourth month following the month in which the healthcare service was rendered. The cost of outstanding claims is estimated as follows: - actual claims notified and assessed during the two months succeeding the financial year end of the scheme, relating to the year under review, and - an estimate of claims, using claims run off tables, for the third and subsequent months succeeding the financial year end of the scheme. Historical claims development information is used on the assumption that this pattern will occur again in the future. Each notified claim is assessed on a separate, case by case basis with due regard to the claim circumstances, information available from managed care: management services and historical evidence of the size of similar claims. The provisions are based on information currently available. However, the ultimate liabilities may vary as a result of subsequent developments. There are reasons why this may not be the case, which, insofar as they can be identified, have been allowed for by modifying the method. Such reasons include: - changes in processes that affect the development/recording of claims paid and incurred (such as changes in claims reversing procedures); - economic, legal, political and social trends (resulting in different than expected levels of inflation and/or minimum medical benefits to be provided); - changes in composition of members and their dependents; and - random fluctuations, including the impact of large losses. The scheme believes that the liability for claims reported in the statement of financial position is adequate and no additional provision is required in terms of a liability adequacy test. Changes in assumptions and sensitivities to changes in key variables No sensitivity analysis has been presented as the process used to determine the estimated cost of outstanding claims presents with a high degree of accuracy. 23

30 THE BUILDING AND CONSTUCTION INDUSTY MEDICAL AID FUND NOTES TO THE ANNUAL FINANCIAL STATEMENTS FO THE YEA ENDED 31 DECEMBE TADE AND OTHE PAYABLES Insurance payables eported claims not yet paid 221, ,615 Unpresented cheques 15,935 12,457 Net contributions received in advance 332, ,887 Amounts due to members 36, , , ,595 Non-insurance payables Fees due to the administrator 473, ,659 Audit fees payable 108,300 93,480 Managed care: management services payable 48,371 49,722 Other payables and accrued expenses 20,096 12, , ,991 1,256,560 1,525,586 The carrying amounts of trade and other payables approximate their fair values due to the short-term maturities of these liabilities. The scheme accrues for audit fees as a constructive legal obligation arising from the requirement by the Medical Schemes Act to have a year-end audit performed. 7 NET CONTIBUTION INCOME Net contributions 67,407,853 61,868,974 8 ELEVANT HEALTHCAE EXPENDITUE Current years claims 49,689,307 49,911,121 Movement in outstanding claims provision 350,000 (360,000) Over provision in prior year (Note 5) (59,942) (180,718) Adjustment for current year 409,942 (179,282) Claims incurred 50,039,307 49,551,121 9 MANAGED CAE: MANAGEMENT SEVICES Pharmacy benefit management 898, ,884 24